“Which do you want first?”

I WOULD PREFER SOME honest financial journalism for starters. The monetary system we operate is a debt based, fiat, Fractional Reserve Banking System. In that system money is created out of thin air at the point when a new debt is written which is then spent into the general money supply. Similarly, when the debt is repaid by extracting it from the general money supply, the money is destroyed, disappearing into the black hole from whence it came.

During the term of the debt (loan) it is repaid with interest. However, only the capital was created out of thin air, the interest was not created at all. Therefore, to enable the debtor to pay back the principal plus interest he must take some of someone else’s capital from the general money supply to do that. For there to be enough money in the general money supply to remove more than you put in there must be an ever-increasing number of new loanees adding their newly-created capital to the pot.

Let’s say you borrow X. Roughly speaking, if it was a mortgage you would pay back, say, 3X. The original X was created out of thin air and added to the money supply. The balance, 2X, had to be added by two other borrowers for you to remove it and pay it back as your own interest. Those other two borrowers are then in the same boat requiring four new borrowers to fund their reapyments and so on, and so on: 8,16,32,64,128,256,512,1024,2048… ad infinitum. This is an expansionary process exponential in nature. So, in this system, the money supply expands exponentially and therefore the number of new borrowers expands exponentially. So then does their consumption of energy and raw materials in order to live. Consequently the production of waste and pollution follows the same process. This is commonly known as the “Growth Paradigm”.

The question you have to answer is this: Do you think that an exponential expansion of population, debt, consumption of raw materials and energy, production of waste and pollution and destruction of the biosphere is sustainable indefinitely? If your answer to that question is no (hint, it was a rhetorical question) then you must come to the conclusion that at some point it must stop being exponential and at the very least, level out remaining at a constant level thereafter, i.e. no growth.

Now the consequences of “no growth”. When you have no growth, the number of new loans, and hence new money, stagnates but the repayment of existing loans continues apace. In doing so, the general money supply contracts. You are destroying existing money and not creating any new money. When the general money supply contracts it is called a depression. Therefore you have a dilemma. To keep the debt-based, fiat, Fractional Reserve Banking system going you need indefinite, relentless, destructive growth.

Without the growth the money supply shrinks and the pyramid collapses. Is this ringing any bells yet? So, what do you want? Do you want to stick with the existing system? If so, you must wait until the pyramid of baseless money has been wiped out so that you can start your ponzi scheme all over again from scratch. This has been done many times before.

Or, do you want a monetary system which is not predicated on the Growth Paradigm? Journalists and politicians who treat the current financial debacle as an unpredictable surprise are either liars or ignorant of the way in which the monetary system works. Either way, they are not qualified to hold their posts. If you do not believe any of the above may I refer you to the handbook or instructional manual from the Federal Reserve on how to operate a Fractional Reserve Banking system.